New Energy Idles Indiana Ethanol Plant on Falling Profitability

By Mario Parker -
Nov 6, 2012

New Energy Corp. idled an ethanol
plant in South Bend, Indiana, because making the fuel has become
unprofitable.

The company is mothballing the 100 million-gallon-a-year
operation as a supply glut, tepid demand and high corn prices in
the aftermath of the worst U.S. drought since the 1950s cut
profitability, Russ Abarr, president of South Bend-based New
Energy, said in a telephone interview today.

“That’s all working against the margins,” Abarr said.
“Unfortunately, it’s happening at a lot of places in the
country and we’ll see more of it happen.”

New Energy’s decision to idle the plant until it’s
profitable comes after Valero Energy Corp. (VLO), the third-biggest
U.S. ethanol producer, said Oct. 30 that it shut distilleries in
Albion, Nebraska, and Linden, Indiana.

Denatured ethanol for December delivery fell 2.2 cents, or
0.9 percent, to $2.332 a gallon yesterday on the Chicago Board
of Trade. Prices have gained 4.9 percent this year.

Bunge-Ergon Vicksburg LLC plans to halt operations at its
Mississippi mill by Nov. 30 and Biofuel Energy Corp. (BIOF) said in
September that it closed a plant in Fairmont, Minnesota.
Southwest Georgia Ethanol LLC stopped production at a Camilla,
Georgia, operation last month.

Abarr said New Energy plans to sell the 28-year-old plant
when the market improves.